17th October 2020
Saleque Sufi

The upstream company of Bangladesh’s gas value chain, Bangladesh Petroleum Exploration and Production Company (Bapex), deserves national priority towards developing it as a flagship company of the country. Due to continued step-motherly treatment by Petrobangla and EMRD, the BAPEX has so far failed to achieve its mission. At the end of 2020, it cannot be relied with exclusive responsibility for carrying out exploration for petroleum in the onshore areas not to speak of developing skills and technology to work in the offshore. In the wake of potential gas crisis in not too distant future, it has now become imperative to appropriately assess the technical, financial and managerial capabilities of the company. BAPEX can definitely carry out development of discovered gas fields, workout and repair wells and even carryout exploration in straightforward onshore structures. It can carry on and further develop its capabilities for 2D and 3D seismic surveys. But given the fast depletion of proven recoverable gas reserve and very remote possibility of replenishing the reserve with possible new discoveries coming soon from limited exploration activities by IOCs in the offshore areas, Bangladesh should invite fresh PSC bidding round for exploration in the Western Region of Bangladesh and even for exploration in the deeper (high pressure zones) prospects of the discovered gas fields. Against the backdrop of COVID-19 pandemic that triggered oil market crash, it is highly unlikely that the PSC bidding round for deep water drilling would attract positive response even in 2021.

 

Bapex Creates Resources and Must Be Treated Differently

As the upstream company of gas value chain, BAPEX creates resources (gas and oil). It is a unique company unlike the midstream and downstream companies. From prospecting to production operation, every phase requires special skills. Experienced petroleum, chemical, mechanical, civil, and electrical engineers, geologists, geo-physicists, chemists, drilling engineers, other semi-skilled and unskilled manpower need special skills. Bangladesh is a forerunner of petroleum resources exploration and exploitation in the Bengal delta. Yet due to poor vision and poor governance, BAPEX has so far failed to live up to expectation. Not treating BAPEX as a special company for harnessing resources from deep down the ground is among the reasons for BAPEX failing to grow as PETRONAS, PERTAMINA and SONARTRAC. It owes its origin to Oil and Gas Development Company (OGDC) created in 1961 which eventually continued as OGDC in Bangladesh after liberation. In 1973, it was renamed as Tailo Shondhani. In 1974, it was made a wing of Petrobangla as E&P directorate and later turned as Petrobangla Exploration Directorate in 1980.  There was no dearth of enthusiasm of works among the officials of the directorate, but unfortunately they got unfair treatment by Petrobangla in matters of promotion and training. In 1989, BAPEX was created with the exploration responsibility only. In the early days, it had to struggle with huge manpower and very limited resources for survival. The government of Sheikh Hasina in 2000 made it as the Exploration and Production (E&P) company.

 

Bapex Vision

·      Carrying out exploration, development and production activities for oil and gas in the selected blocks and structures allocated for BAPEX.

·      Carrying out drilling and work over for national gas productioncompanies viz. Bangladesh Gas Fields Company Ltd and Sylhet Gas Field Company Ltd. under service contract.

·      Carrying out work over/drilling for IOCs and JVA partner under service contract.

·       Carrying out 2D and 3D seismic survey, processing and interpretation.

·      Operating Mud Logging Unit during drilling, operation of cementing unit and cement squeeze job at different phases of drilling and work over, well testing (surface), operation of slick line unit etc.

·       Rig building and it`s operation and dis-assembling of rig

·      Developing abandoned/marginal gas field

 

Unfortunately, neither Petrobangla nor EMRD over the past 20 years since turning BAPEX as E&P objectively assessed its capabilities and achievements objectively in matters of working out and implementing the appropriate mission for achieving the mission. Keeping it active, marginal companies like Scimitar was engaged in very nontransparent manner to explore oil in prolific Surma basin after Petrobangla exploration directorate discovered oil while drilling for gas at Sylhet 7. People’s movement led to the exit of Scimitar, which later also lost arbitration against Bangladesh in international court. But unfortunately vested interested groups illegally handed over Petrobangla-owned Jalalabad Gas field to another tiny company Occidental. By then in 2001, BAPEX was definitely competent enough to develop Jalalabad gas field. BAPEX was again wrongly treated with the emergence of NIKO resources for development of so-called marginal gas fields (Feni, Chatak including virgin Tengratilla). BAPEX was made joint venture partner of NIKO very much to the displeasure of Petrobangla professionals. The unfairness of NIKO engagement was established through Bangladesh winning the arbitration in the international tribunal.

 

In late 1990s, UNOCAL proposed an integrated project named Western Region Integrated Project (WRIP). Under its scope, the WRIP had provision for developing Shahbajpur Gas field, constructing a 120 KM 20 inches OD gas transmission pipeline from Shahbajpur, Bhola to Digholia, Khulna, setting up 60 MW power plant at Bhola, 100 MW at Barishal and 300 MW at Khulna. The pipe route was surveyed, designed and documents produced, provisions were kept for gas supply to Mongla and Goplaganj. That project concept was negotiated and draft documents like GPSA, GSA, GTA, PSA and IP were negotiated. UNOCOL proposed project in 2000 was US$ 700 million. Looking back in retrospect, we can say that abandoning the project at matured stage was an opportunity lost. Twenty years down the lane, Shahbajpur gas resource is not unlocked.

 

After returning to state power in 2009, the Awami League-led government took up a project for expanding the gas reserve. But Petrobangla initiative for entering into contract for engaging a Polish contractor fell flat. The gas deficit started rocking the energy security. Industries, power generation and fertilizer production were badly hampered. Upon a discussion at the highest government-level, Russian Energy Giant GAZPROM appeared on the scene. By that time, a poor development well drilling work was performed at Titas gas field in Brahmanbaria in the shallow gas bearing zones. Unfortunately, getting panicked by profuse gas leakage, Petrobangla and EMRD entered into a contract with GAZPROM for drilling 10 development wells in BGFCL and SGFL gas fields. Many believed that BAPEX was capable for doing these. It already had rigs and manpower for the work. By that time, BERC created a special Gas Development Fund (GDF) exclusively for using by the BAPEX for exploration of petroleum resources. Unfortunately, the contract with GAZPROM provided opportunity to them for engaging subcontractors. BAPEX itself also failed in professionally monitoring and managing works of GAZPROM engaged drilling contractor ERIELL of Uzbekistan. Though BAPEX paid astronomically higher price for drilling of 10 wells, yet the workmanship was poor requiring repairs and work over. This hurt BAPEX badly as the money for this was borrowed to BAPEX from GDF at high interest rate (though it was supposed to be paid as grant). Despite severe criticism all around, GAZPROM was given contract for another 7 wells at higher than BAPEX rates.

 

108 Well Drilling Project of Bapex

Now EMRD, Petrobangla and BAPEX blame each other, but the government’s plan to accomplish drilling of 108 wells in 5 years from 2016, including 56 exploration wells, was a weird concept. Experts criticized terming this as a ploy for crippling BAPEX. Nevertheless, BAPEX tried its best through engaging survey contractors and engaging its survey crews in identifying structures procuring materials. The works started taking off. But suddenly GAZPROM emerged again in the picture.  BAPEX in the meantime discovered and developed few marginal gas fields and achieved a major success in discovering a gas field in Bhola. Eventually, the government realized late that the 108 well drilling project was a waste of time. In the meantime, upon hectic lobbying by a powerful syndicate, the EMRD is contemplating to engage GAZPROM once again for drilling development and exploratory wells at Bhola. In a recent webinar, organized by Energy & Power magazine, sector-related experts strongly opposed that idea. They found no justifiable reason at all as to why BAPEX should not be doing all works in Bhola using its Rigs and manpower? Why it has to engage GAZPROM against the backdrop of very unprofessional works of its appointed drilling subcontractor.

 

Assessing the Capability of Bapex

BAPEX has proven track records of successfully accomplishing development wells in the discovered gas fields. It can definitely carry on accomplishing well repairs and work overs. It can also continue doing exploratory works in relatively easier structures in onshore. But for drilling in tight structures in greater Chattogram areas, BAPEX should form joint ventures with IOCs to be selected in transparent manners. BAPEX has no expertise for working in high pressure zones in the deeper prospects and in the offshore.

 

In the wake of fast depletion of proven gas reserve and apprehension over complete depletion of the remaining recoverable reserve by 2031, Bangladesh must immediately abandon the strategy of the BAPEX-alone policy for exploration in onshore area. Fresh round of PSC bidding for engaging IOCs in onshore areas – virtually unexplored Western region, deeper prospects of discovered gas fields must be let out by early 2021 for concluding PSCs by end 2021. Against the backdrop of COVID-19 pandemic, triggering oil market crash, hamstrung leading IOCs may not respond positively to Petrobangla PSC bidding round for deep water drilling in 2021. Moreover, with only the possibility of setting up of land based LNG terminal at Matarbari not more than 2,000 MMCFD LNG import may be possible by 2030.

 

Recommendations

Relevant experts through reviewing the organogram of ONGC, Petro Vietnam, and PETRONAS must restructure Organogram of BAPEX. Board of directors of BAPEX must also be reorganized by line professionals and experts, instead of inexperienced bureaucrats.

 

Bapex board must be given the authority to approve procurement of equipment and services required urgently for managing emergency situation like pipe stuck, fishing instead of following the protracted routes.

 

The government has to set policy to develop BAPEX like ONGC, CNCC, CNPC, SINPOC or a drilling manager. If the idea is to make it flagship national company, it must invest in BAPEX letting it to grow as an autonomous self-governed company setting salary and benefits of its employees, setting targets and achieving through missions accomplished. Exploration and exploitation of petroleum resources need very exclusive skills and expertise.

 

Proceeds from GDF must be given as grants to BAPEX for carrying out exploration and organizing local and foreign training of its professionals. Gas price to BAPEX must be the same as that of IOCs. They must also be given similar tax and other incentives given to the IOCs.

 

Bapex must recruit fresh professionals and continue building human capital through exposure to modern technology. BAPEX must not be neglected, neither its capacity be overestimated if Bangladesh desires achieving sustainable gas security for fueling its economic growth. Be patient with BAPEX. Observe them, support them and if necessary, audit their performances. But please do not enforce on them liabilities of bearing unnecessary foreign companies doing their job in their exclusive domain at Bhola, Chatak and elsewhere.


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